Loopback IP Address

Loopback IP Address: 
The name itself talks about it. Want to know more on where how and why it is used.. Follow up with below paragraphs.
This ranges in 127.0.0.0 to 127.255.255.255. This address is not assigned to any of the real interfaces on the devices. Sometimes loop-back address is also used for management datagrams such as alarms originating from the equipment. 
At the end of this section i have mentioned one instance where i have used it practically. A loopback test and can be performed within a modem or transceiver by connecting its output to its own input. If this device receives its own signal back, this proves that the circuit is functioning. 

IP datagrams sent by a host to a 127.x.x.x loopback address are not passed down to the data link layer for transmission. Instead, they “loop back” to the source device at the IP level. 
Mostly this is used by developers for prototype testing in Initial phase. Using an IPV4 address and reserving it for usage as loopback address (when more such address required) would prove costly, as IP address availability is limited. Hence the IPV6(0:0:0:0:0:0:0:1) usage should help, but not sure about this. 

Practical Usage:
There was a customer who has reported an Alarm issue on a 2G-SGSN. This being a 2G-SGSN doesn't need any IU Interface to be configured, only Gb Interface IP configuration is needed.          
However, because of SGSN behavior the Alarm was raised for IU interface alarm missing. This is where loopback IP helped. The Alarm never popped up again after configuring this dummy loopback IP Address on IU interface. Hope this should be helpful as a workaround for the issues where Loopback can act as a substitute.

Thanks all.